2016 (4) TMI 180 - HC - Customs

Validity of prohibition imposed - in terms of Regulation 23 of the Customs Brokers Licensing Regulations, 2013 - Appellant cleared raw materials, which are used to manufacture drugs and pharmaceuticals without proper import licence and without clearance from the Assistant Drug Controller results in prohibiting the appellant from working in any section of Chennai Customs Commissionerate and Customs Stations under the jurisdiction of Chennai Customs Zone - Appellant contended that once the proceedings initiated by the Cochin Commissionerate had resulted only in the imposition of a penalty of ₹ 10,000/-, the order of the Chennai Commissionerate prohibiting the appellant from operating within the area of Chennai Commissionerate, cannot continue indefinitely - Held that - it appears that the order of the Licensing Authority holding the appellant guilty of violation and imposing a penalty has been challenged by the appellant before the Tribunal. So long as that order remains final, the finding that there was violation, also remains. Therefore, the appellant can seek a review of an order of prohibition only if the finding recorded by the Cochin Commissionerate that there was a violation, is ultimately set aside. - Decided against the appellant

Summary

Issues:
Challenge to prohibition imposed under Regulation 23 of Customs Brokers Licensing Regulations, 2013.

Analysis:
The appellant, a Licensed Customs Broker, challenged a prohibition order imposed by the Commissioner of Customs, Chennai, under Regulation 23 of the Customs Brokers Licensing Regulations, 2013. The appellant's license, initially issued by the Cochin Customs Commissionerate, was extended to the Chennai Commissionerate. The prohibition arose from the appellant's involvement in filing Bills of Entry for a company that imported raw materials without the necessary licenses. The Chennai Commissionerate prohibited the appellant from operating within its jurisdiction based on these alleged violations. The appellant challenged this prohibition through a writ petition, arguing that the penalty imposed by the Cochin Commissionerate should limit the Chennai Commissionerate's authority to prohibit further.

The appellant contended that the penalty imposed by the Cochin Commissionerate should restrict the Chennai Commissionerate's power to prohibit further, citing legal precedents from the Kerala High Court and Mumbai Bench of the Tribunal. The court examined the relevant regulations, specifically Regulations 18, 19, 22, and 23 of the Customs Brokers Licensing Regulations, 2013. Regulation 22 allows for penalties up to Rs. 50,000 for violations, while Regulation 23 empowers the Commissioner of Customs to prohibit a broker from working in specific sections of a Customs Station for failing obligations under Regulation 11. The court emphasized that Regulation 23's purpose is distinct from Regulation 19, which deals with license suspension pending inquiry. The court highlighted that Regulation 23 does not require a pending inquiry to impose a prohibition, focusing solely on the broker's compliance with Regulation 11 obligations.

The court disagreed with the Kerala High Court and Mumbai Tribunal decisions that equated the powers under Regulations 19 and 23, emphasizing the unique nature of Regulation 23's limited prohibition authority. The court reasoned that if Regulation 23 were interpreted similarly to Regulation 19, it would render Regulation 23 redundant. The court clarified that a broker can challenge a prohibition only if the finding of violation leading to the penalty remains unsettled. Since the Cochin Commissionerate's penalty order stood, the appellant's challenge to the prohibition failed, and the court dismissed the appeal. The court closed the case without costs, affirming the prohibition order by the Chennai Commissionerate.